Terms and rights attached to equity shares
The Company has only one class of equity shares having a par value of ? 10 per share. Each holder of equity shares is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the Shareholders.
The dividend proposed by the Board of Directors is subject to the approval of Shareholders at the ensuing Annual General Meeting, except in case of interim dividend.
b) Shares reserved for issue under options
Information relating to the Employee Stock Option Plan (ESOP)/Performance based Stock Unit (PSU), including details regarding options issued, exercised and lapsed during the year and options outstanding at the end of the reporting year is set out in note 28.
Nature and purpose of reserve:a) Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only For limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act,2013.
b) General reserve
The general reserve is used From time to time to transfer profits From retained earnings For appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item oF other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
c) Surplus in the statement of profit and loss
Surplus in the statement oF profit and loss that the Company earned/incurred till date, less any transfers to general reserve, dividends or other distributions paid to Shareholders.
d) Share-based options outstanding account
The share options outstanding account is used to recognise the grant date fair value of options issued to employees under share-based payments arrangement over the vesting period. (Refer Note. 28)
b) Defined benefit plans
The Company has a defined benefit gratuity plan in India (funded). The Company's defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member's length of service and salary at separation.
The following tables summarise the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
The weighted average duration of the defined benefit obligation is 7 years (previous year - 8 years)
These plans typically expose the Group to actuarial risks such as: Interest rate risk, salary risk, Investment risk, Asset Liability Matching risk, Mortality risk and Concentration risk.
i) Interest Rate Risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
ii) Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan's liability.
iii) Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
iv) Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
v) Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
vi) Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance Company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.
25. SEGMENT INFORMATION
The Company is in the business of providing asset management services to the schemes of Nippon India Mutual Fund, funds launched in GIFT city, portfolio management service, and advisory service to the clients/schemes. The primary segment is identified as asset management services. As such, the Company's financial results are largely reflective of the asset management business and accordingly there are no separate reportable segments as per Ind AS 108 Operating Segment.
26. FAIR VALUE MEASUREMENTa) Fair value hierarchy
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level 1 are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level 2 measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level 3 measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety.
This section explains the judgements and estimates made in determining the Fair values of the financial instruments that are (a) recognised and measured at Fair value and (b) measured at amortised cost and For which Fair values are disclosed in the financial statements. To provide an indication about the reliability oF the inputs used in determining Fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: The Fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used For financial assets held by the company is the current bid price. These instruments are included in level 1.
Level 2: The Fair value oF financial instruments that are not traded in an active market (For example, over-the-counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. IF all significant inputs required to Fair value an instrument are observable, the instrument is included in level 2.
Level 3: IF one or more oF the significant inputs is not based on observable market data, the instrument is included in level 3.
b) Valuation technique used to determine fair value
Mutual Funds: Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed DebtSecurities: At Amortised Cost
Alternative Investment Funds: Net Asset Value (NAV) provided by issuer fund which is arrived based on valuation from independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments.
Lease Liabilities: Discounted cash flows based on present value oF expected payments, discounted using a risk-adjusted discount rate.
In order to assess Level 3 valuations as per Company's investment policy, the management reviews the performance of the investee companies.
27. FINANCIAL RISK MANAGEMENT
The Company activities expose it to credit risk, liquidity risk and market risk. The Company's risk management is carried out by a Risk department under the policies approved by the Board oF Directors. The Risk team identifies, evaluates and highlights financial risks in close cooperation with the other departments.
A Credit risk management
Credit risk is the risk oF suffering financial loss, should any oF the Company's customers, clients or market counterparties Fail to Fulfil their contractual obligations to the Company. The Company is also exposed to other credit risks arising from investments in debt securities. Credit risk is the one of the largest risk for the Company's business; management therefore carefully manages its exposure to credit risk.
1. The maximum exposure to credit risk at the reporting date is primarily from Cash & Cash Equivalents and Bank Fixed Deposit. The credit worthiness oF such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high .
2. The Company has extended loans to its subsidiary. Credit risk on the loans has been managed by the Company. The Company uses expected credit loss model to assess the impairment loss or gain. Refer note 6 for the same.
3. Exposures to customers' outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. As the Company has a contractual right to such receivables as well as has the control over such funds due from customers, the Company does not estimate any credit risk in relation to such receivables. Further, management believes that the unimpaired amounts that are past due by more than 180 days are still collectible in full, based on historical payment behaviour.
B Liquidity risk and funding management
Prudent liquidity risk management implies maintaining sufficient cash and liquid investments to meet payment obligations, when due, under all circumstances.
Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis oF expected cash flows. This is generally carried in accordance with practice and limits set by the Company aFter giving due considerations to internal and external factors that could impact the liquidity position of the Company. Further, since the Company has no external borrowings and has sufficent cash and liquid investments to meet payment obligations, there is low liquidity risk.
Analysis of financial assets and liabilities by remaining contractual maturities
The table below summarises the maturity profile of the cash flows of the Company's financial assets and liabilities as at reporting date.
C Market Risk
Market risk is the risk of loss of Future earnings, Fair values or Future cash flows related to financial instrument that may result From adverse changes in market rates and prices (such as Foreign exchange rates, interest rates, other prices). The Company is exposed to market risk primarily related to currency risk, interest rate risk and price risk.
i) Foreign currency risk
The Company has insignificant amount of Foreign currency denominated assets and liabilities. Accordingly, there is no significant exposure to currency risk.
ii) Interest Rate Risk
Interest rate risk is the risk where the Company is exposed to the risk that Fair value or Future cash flows of its financial instruments will fluctuate as a result of change in market interest rates. Tax Free Bonds held by the Company and loans extended by the Company to subsidiaries are at yearly fixed rate of coupon and accordingly the Company does not perceive any interest rate risk.
iii) Price risk Exposure
Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and related market variables including interest rate for investments in debt oriented mutual funds and debt securities, caused by Factors specific to an individual investment, its issuer and market. The Company's exposure to price risk arises From diversified investments in mutual Funds held by the Company and classified in the balance sheet at Fair value through profit or loss (note 7).
Sensitivity Analysis
The table below summarizes the impact of increases/decreases of the Net Asset Value (NAV) on the Company's investment in Mutual Fund and its profit For the period. The analysis is based on the assumption that the NAV increased by 5% or decreased by 5% with all other variables held constant, and that all the Company's investments in mutual funds moved in line with the NAV.
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